Chevron 2007 Annual Report Download - page 55

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 53 53
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Chevron Corporation:
In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of income, comprehen-
sive income, shareholders’ equity and cash flows present fairly,
in all material respects, the financial position of Chevron
Corporation and its subsidiaries at December 31, 2007, and
December 31, 2006, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 2007, in conformity with accounting principles
generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of Decem-
ber 31, 2007, based on criteria established in Internal Control –
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The
Company’s management is responsible for these financial state-
ments, for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying
Management’s Report on Internal Controls Over Financial
Reporting. Our responsibility is to express opinions on these
financial statements and on the Company’s internal control
over financial reporting based on our integrated audits. We
conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements
are free of material misstatement and whether effective internal
control over financial reporting was maintained in all material
respects. Our audits of the financial statements included
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included
obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
As discussed in Note 13 to the Consolidated Financial
Statements, the Company changed its method of accounting
for buy/sell contracts on April 1, 2006.
As discussed in Note 15 to the Consolidated Financial
Statements, the Company changed its method of accounting
for uncertain income tax positions on January 1, 2007.
As discussed in Note 20 to the Consolidated Financial
Statements, the Company changed its method of accounting
for defined benefit pension and other postretirement plans on
December 31, 2006.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reason-
able detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reason-
able assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in
accordance with authorizations of management and directors
of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inad-
equate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
San Francisco, California
February 28, 2008